Belle Net Rises 24%; Company Buys Acquires Big Step

By Bloomberg News -
Mar 21, 2012

Belle International Holdings Ltd., (1880)
China’s largest retailer of women’s shoes, aims to add 10
percent more stores this year after posting a 24 percent profit
increase and saying it will buy rival Big Step.

Bolstered by demand from China’s increasingly wealthy
shoppers, Belle’s net income in 2011 rose 24 percent to 4.25
billion yuan ($672 million) from a year earlier, meeting the
average estimate of 4.26 billion yuan from 17 analysts surveyed
by Bloomberg. The shoemaker will buy Big Step, a retailer of
Nike (NKE) and Adidas brand sportswear with 600 outlets in China, for
as much as 920 million yuan, it said.

Belle, which distributes Nike and Adidas (ADS) branded sportswear
in greater China, is reaping rewards from the China’s push to
bolster consumption at home. Premier Wen Jiabao earlier this
month pledged to adjust taxes as the nation seeks to end the
economy’s reliance on investment and exports in favor of
boosting domestic spending. Annual urban disposable income rose
14 percent to about 21,810 yuan in 2011.

The future potential for growth in China’s consumer retail
market “will not change significantly due to short-term
disruptions, given the economic growth potential as well as the
trend of consumption upgrade and measures to promote domestic
demand,” Belle said in the statement to Hong Kong’s stock
exchange yesterday.

Weaker Consumer Confidence

Consumer confidence was impacted by the slowing economy in
China as higher costs, sluggish demand from abroad and the
European debt crisis led to a slowdown in growth in the exports
sector, Belle said. China’s economic growth in 2011 slowed to
9.2 percent from 10.4 percent in 2010. Premier Wen Jiabao set a
2012 economic growth target of 7.5 percent on March 5, lower
than an 8 percent goal in place since 2005.

Shares of Belle gained 4.7 percent to HK$14.18 at the close
in Hong Kong, compared with a 0.2 percent loss on the benchmark
Hang Seng Index.

Profit margins will be “steady” this year, Belle’s Chief
Executive Officer Sheng Baijiao said at a briefing in Hong Kong
today. Production costs will stabilize and the company may
increase prices slightly this year, Sheng said. Gross profit
margin widened to 57.2 percent in 2011 from 55.7 percent, and
operating profit margin widened to 18.2 percent from 16.7
percent, Belle said.

First-quarter sales at stores open for more than a year are
expected to grow at a low single-digit pace, while the company
targets a mid-to-high single digit same-store sales growth this
year, Sheng said.

Sales increased 22 percent to 28.9 billion yuan in 2011,
the company said.

The retailer, owner of shoe brands Staccato and Joy &
Peace, said it added 1,958 footwear stores in China, a 24
percent increase from 8,312 outlets at the end of 2010.